Question 1

A companies ratios are more meaningful when compared to other companies in the same industry.

Accepted Answer

A) True 
 B)False

Question 2

Which stage of an industry's growth cycle is most influenced by economic events?

Accepted Answer

A)  initial development 
B)  stability or decline 
C)  mature growth 
D)  rapid expansion 
A)  initial development 
B)  stability or decline 
C)  mature growth 
D)  rapid expansion

Question 3

If a company rewards executives with stock options, core earnings will be lower than net income.

Accepted Answer

A) True 
 B)False

Question 4

Marco's just reported an EPS of $1.68 on revenues of $440 million.The company has 12 million shares outstanding.Total assets are $280 million, current liabilities equal $48 million, and long-term debt is $112 million.Net fixed assets are worth $230 million.Given this information, which one of the following statements is correct?

Accepted Answer

A)  Marco's debt-equity ratio is 0.75. 
B)  Marco's current ratio is 1.75. 
C)  Marco's total asset turnover is 3.67. 
D)  Marco's net working capital is $2 million. 
A)  Marco's debt-equity ratio is 0.75. 
B)  Marco's current ratio is 1.75. 
C)  Marco's total asset turnover is 3.67. 
D)  Marco's net working capital is $2 million.

Question 5

Which one of the following statements is true?

Accepted Answer

A)  Monetary policy includes adjusting interest rates and determining the level of government taxation. 
B)  Inflation has little, if any, impact on the economy or the financial markets. 
C)  Both consumer spending and business investment are key components of the economy. 
D)  Restrictive fiscal policy tends to increase economic activity. 
A)  Monetary policy includes adjusting interest rates and determining the level of government taxation. 
B)  Inflation has little, if any, impact on the economy or the financial markets. 
C)  Both consumer spending and business investment are key components of the economy. 
D)  Restrictive fiscal policy tends to increase economic activity.

Question 6

Fundamental analysis is based on the presumption that the value of a stock is influenced by the financial performance of the issuing company.

Accepted Answer

A) True 
 B)False

Question 7

The government has an expansionary economic policy when it

Accepted Answer

A)  increases taxes. 
B)  increases government spending. 
C)  promotes rising interest rates. 
D)  limits exports of goods and services. 
A)  increases taxes. 
B)  increases government spending. 
C)  promotes rising interest rates. 
D)  limits exports of goods and services.

Question 8

Increases in either interest rates or taxes tend to

Accepted Answer

A)  contract the level of economic activity. 
B)  increase the level of business investment. 
C)  indicate governmental expansion of the economy. 
D)  signal the trough of a recessionary market. 
A)  contract the level of economic activity. 
B)  increase the level of business investment. 
C)  indicate governmental expansion of the economy. 
D)  signal the trough of a recessionary market.

Question 9

Kim has gathered the following information on a company.
 
What is the amount of the earnings per share?

Accepted Answer

A)  $0.14 
B)  $0.25 
C)  $0.28 
D)  $0.30 
A)  $0.14 
B)  $0.25 
C)  $0.28 
D)  $0.30

Question 10

If a company's ROA is high, then an investor can assume that the company

Accepted Answer

A)  is in danger of defaulting on its loans. 
B)  pays a high dividend. 
C)  is profitable. 
D)  has more equity than debt in its capital structure. 
A)  is in danger of defaulting on its loans. 
B)  pays a high dividend. 
C)  is profitable. 
D)  has more equity than debt in its capital structure.

Question 11

For most companies, the dividend payout ratio falls within the range of

Accepted Answer

A)  10 to 20%. 
B)  20 to 40%. 
C)  40 to 60%. 
D)  60 to 80%. 
A)  10 to 20%. 
B)  20 to 40%. 
C)  40 to 60%. 
D)  60 to 80%.

Question 12

Which of the following are measures of liquidity?
I.net working capital
II.accounts receivable turnover
III.current ratio
IV.times interest earned

Accepted Answer

A)  I and III only 
B)  I, II and III only 
C)  I, II and IV only 
D)  I, III and IV only 
A)  I and III only 
B)  I, II and III only 
C)  I, II and IV only 
D)  I, III and IV only

Question 13

The intrinsic value of a security is based on the
I.amount of risk.
II.current market value of the security.
III.discount rate applicable to the security.
IV.estimated future cash flows from the security.

Accepted Answer

A)  I and III only 
B)  III and IV only 
C)  I, II and III only 
D)  I, III and IV only 
A)  I and III only 
B)  III and IV only 
C)  I, II and III only 
D)  I, III and IV only

Question 14

In seeking potential stock investments, most analysts look for companies that have PEG ratios that are equal to or less than one.

Accepted Answer

A) True 
 B)False

Question 15

One of the basic premises of security analysis, and in particular fundamental analysis, is that

Accepted Answer

A)  a stock's price is based on its past cash flows rather than on anticipated future cash flows. 
B)  market sectors do not move in concert with business cycles. 
C)  all securities have an intrinsic value that their market value will approach over time. 
D)  a security's risk has relatively little effect on the security's return. 
A)  a stock's price is based on its past cash flows rather than on anticipated future cash flows. 
B)  market sectors do not move in concert with business cycles. 
C)  all securities have an intrinsic value that their market value will approach over time. 
D)  a security's risk has relatively little effect on the security's return.

Question 16

The Federal Reserve through monetary policy can help expand the economy by

Accepted Answer

A)  lowering income taxes on individuals. 
B)  reducing tariffs such that foreign exports can increase. 
C)  supporting a moderate growth of the money supply. 
D)  increasing government spending on the national infrastructure. 
A)  lowering income taxes on individuals. 
B)  reducing tariffs such that foreign exports can increase. 
C)  supporting a moderate growth of the money supply. 
D)  increasing government spending on the national infrastructure.

Question 17

Changes in stock prices tend to lag changes in level of economic activity by several months.

Accepted Answer

A) True 
 B)False

Question 18

A company has 2 million shares of common stock outstanding.Annual sales are $26 million.The net profit margin is 8% and the dividend payout ratio is 40%.Currently the stock trades at $17.68 per share.Given this information, the company has a P/E ratio of

Accepted Answer

A)  16 and a dividend yield of 2.35%. 
B)  16 and a dividend yield of 3.20%. 
C)  17 and a dividend yield of 2.35%. 
D)  17 and a dividend yield of 3.20%. 
A)  16 and a dividend yield of 2.35%. 
B)  16 and a dividend yield of 3.20%. 
C)  17 and a dividend yield of 2.35%. 
D)  17 and a dividend yield of 3.20%.

Question 19

A total asset turnover of 3 means that every

Accepted Answer

A)  $1 in sales is supported by $3 of assets. 
B)  $3 in assets produces $1 in net earnings. 
C)  $1 in total assets is replaced on average every 3 years. 
D)  $1 in assets produces $3 in sales. 
A)  $1 in sales is supported by $3 of assets. 
B)  $3 in assets produces $1 in net earnings. 
C)  $1 in total assets is replaced on average every 3 years. 
D)  $1 in assets produces $3 in sales.

Question 20

The measure that indicates how efficiently assets are being used to support sales is called the

Accepted Answer

A)  total asset turnover. 
B)  current ratio. 
C)  book value. 
D)  net profit margin. 
A)  total asset turnover. 
B)  current ratio. 
C)  book value. 
D)  net profit margin.

A companies ratios are more meaningful when compared to other companies in the same industry.

Which stage of an industry's growth cycle is most influenced by economic events?

If a company rewards executives with stock options, core earnings will be lower than net income.

Which one of the following statements is true?

Fundamental analysis is based on the presumption that the value of a stock is influenced by the financial performance of the issuing company.

The government has an expansionary economic policy when it

Increases in either interest rates or taxes tend to

Kim has gathered the following information on a company. What is the amount of the earnings per share?

If a company's ROA is high, then an investor can assume that the company

For most companies, the dividend payout ratio falls within the range of

Which of the following are measures of liquidity? I.net working capital II.accounts receivable turnover III.current ratio IV.times interest earned

The intrinsic value of a security is based on the I.amount of risk. II.current market value of the security. III.discount rate applicable to the security. IV.estimated future cash flows from the security.

In seeking potential stock investments, most analysts look for companies that have PEG ratios that are equal to or less than one.

One of the basic premises of security analysis, and in particular fundamental analysis, is that

The Federal Reserve through monetary policy can help expand the economy by

Changes in stock prices tend to lag changes in level of economic activity by several months.

A company has 2 million shares of common stock outstanding.Annual sales are $26 million.The net profit margin is 8% and the dividend payout ratio is 40%.Currently the stock trades at $17.68 per share.Given this information, the company has a P/E ratio of

A total asset turnover of 3 means that every

The measure that indicates how efficiently assets are being used to support sales is called the

The Investment Environment

Securities Markets and Transactions

Investment Information and Securities Transactions

Return and Risk

Modern Portfolio Concepts

Common Stocks

Stock Valuation

Market Efficiency, Behavioral Finance, and Technical Analysis

Fixed-Income Securities

Bond Valuation

Mutual Funds: Professionally Managed Portfolios

Managing Your Own Portfolios

Options: Puts and Calls

Commodities and Financial Futures

Filters

Exam 7: Analyzing Common Stocks

A companies ratios are more meaningful when compared to other companies in the same industry.

Which stage of an industry's growth cycle is most influenced by economic events?

If a company rewards executives with stock options, core earnings will be lower than net income.

Which one of the following statements is true?

Fundamental analysis is based on the presumption that the value of a stock is influenced by the financial performance of the issuing company.

The government has an expansionary economic policy when it

Increases in either interest rates or taxes tend to

Kim has gathered the following information on a company. What is the amount of the earnings per share?

If a company's ROA is high, then an investor can assume that the company

For most companies, the dividend payout ratio falls within the range of

Which of the following are measures of liquidity? I.net working capital II.accounts receivable turnover III.current ratio IV.times interest earned

The intrinsic value of a security is based on the I.amount of risk. II.current market value of the security. III.discount rate applicable to the security. IV.estimated future cash flows from the security.

In seeking potential stock investments, most analysts look for companies that have PEG ratios that are equal to or less than one.

One of the basic premises of security analysis, and in particular fundamental analysis, is that

The Federal Reserve through monetary policy can help expand the economy by

Changes in stock prices tend to lag changes in level of economic activity by several months.

A company has 2 million shares of common stock outstanding.Annual sales are $26 million.The net profit margin is 8% and the dividend payout ratio is 40%.Currently the stock trades at $17.68 per share.Given this information, the company has a P/E ratio of

A total asset turnover of 3 means that every

The measure that indicates how efficiently assets are being used to support sales is called the

The Investment Environment

Securities Markets and Transactions

Investment Information and Securities Transactions

Return and Risk

Modern Portfolio Concepts

Common Stocks

Stock Valuation

Market Efficiency, Behavioral Finance, and Technical Analysis

Fixed-Income Securities

Bond Valuation

Mutual Funds: Professionally Managed Portfolios

Managing Your Own Portfolios

Options: Puts and Calls

Commodities and Financial Futures

Filters